Thain held the top post at Merrill before it was sold to Bank of America (BAC, Fortune 500) in September 2008 during the height of the financial crisis, a deal that Thain helped broker.

He left Bank of America in January of last year amid outrage over the deal and bonus controversy as well as reports of lavish spending, including reports that he had spent $1.22 million in early 2008 to redecorate his office at Merrill.

CIT said Thain was the right leader to head the company as it transitions into becoming a "more streamlined commercial lender."

An important lender to small and expanding businesses, CIT was hit hard during the financial crisis, and its collapse late last year left many small firms scrambling to find funds to keep their companies running.

Thain, whose career includes several years at Goldman Sachs (GS, Fortune 500) as well as serving as CEO of the New York Stock Exchange, said in a statement that he was pleased to be leading the newly organized CIT.

"Much has been accomplished in recent months to position CIT for renewed success. We will build upon this progress and work even harder to support small and mid-market businesses," he said.

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